Another step towards reform

Another step towards reform

Following the publication of the FCA’s new SPAC regime (see The new UK SPAC regime – not following the crowd), the FCA has now published final Listing Rules to change free float and minimum market capitalisation requirements for companies on the Official List and to enable companies with dual class share structures to secure a premium listing (PS21/22).

Most of these changes are very similar to their original proposals and apply from 3 December 2021, with some transitional provisions.

This is another step towards addressing Lord Hill’s recommendations in his UK Listing Review (see The UK listing review – seizing the opportunity for reform?) and is part of a wider project including consultations by:

• the FCA on revising the listing segments (see UK Listing Review – FCA sets the stage for radical reform);
• HM Treasury on reforming the UK’s prospectus regime (see Reimagining the UK’s prospectus regime – HM Treasury publishes its consultation paper); and
• the UK Secondary Capital Raising Review on optimising the capital raising process for UK listed companies (Call for Evidence).

Overview

The new Listing Rules seek to address issues with the existing regime that the FCA felt were more urgent and did not impact the more holistic consultation on reform to the listing segments. The changes to the rules are:

• allowing dual class share structures in the premium listing segment in certain limited circumstances;
• reducing the free float (amount of shares an issuer must have in public hands) for premium and standard listed companies from 25% to 10%;
• increasing the minimum market capitalisation threshold for the premium and standard listing segments for shares in companies (other than funds) from £700,000 to £30 million (lower than the £50 million originally proposed); and
• making minor changes to the Listing Rules, Disclosure Guidance and Transparency Rules and Prospectus Regulation Rules to simplify and modernise them.

The FCA has decided not to make changes to track record requirements for premium listed companies at this stage as there needs to be a wider review of this requirement.

Please read the full article below.